Greece to review arms purchases amid bribe scandal

CORRECTS THE YEAR Dimitris Papachristos, a former arms contract negotiator appears in court to give testimony in a major corruption probe, in Athens on Friday, Jan 3, 2014. Papachristos was taken into custody on corruption charges following his testimony, while the government vowed to overhaul its entire arms procurement process. (AP Photo/Fosphoto, Angeliki Panagiotou)

ATHENS, Greece (AP) — The Defense Ministry in crisis-hit Greece pledged Friday to overhaul arms procurement procedures following the arrest of former weapons contract negotiators accused of paying bribes for major government contracts.

Defense Minister Dimitris Avramopoulos said the ministry was working on plans to place arms contracts under increased parliamentary oversight to "guarantee the reputation of the armed forces."

Prosecutors are investigating the alleged payment of bribes worth millions of euros to former senior defense officials to secure weapons deals under Socialist governments in the late 1990s and early 2000s following tension with regional rival Turkey.

The Socialists are currently the minority party supporting the rickety, conservative-led coalition government.

Greece is struggling through its worst financial crisis in more than half a century, and has been kept from bankruptcy by international bailouts. Harsh austerity measures imposed in return for the money have led to a public backlash against alleged corruption in public office and spurred multiple investigations by the judiciary.

The procurements probe follows the arrest of former Socialist Defense Minister Akis Tsochadzopoulos, who in October was sentenced to 20 years in prison following a related corruption investigation.

Last month, a former senior procurement official at the Defense Ministry, who served from 1997-2002 — mostly under Tsochadzopoulos — was arrested and admitted to taking some $15 million in bribes to back costly weapons purchases.

In testimony, a copy of which was seen by the Associated Press, Antonios Kantas claimed he received the bribes from local representatives of foreign arms manufacturers, including German, French and Russian firms. The deals allegedly included submarine, tank, fighter jet and missile purchases.

Two of the Greek contract negotiators named by Kantas have been arrested and charged with corruption and money laundering. Sources briefed on the case said both have admitted to giving bribes — but not to politicians.

On Friday, Dimitris Papachristos, 78, who represented German arms manufacturer now known as Kraus-Maffei Wegmann, was jailed pending trial after testifying before an investigating judge.

Officials at the German company could not be immediately reached for comment.

The other former negotiator, Panagiotis Efstathiou, 83, has been released on bail of 500,000 euros. According to a transcript seen by the AP, he admitted making payments to a string of senior military officials, including a former army and navy chief of staff.

A lawyer representing Efstathiou said graft was "an unfortunate and appalling reality" in Greek military procurements.

"The majority of Greek officers in the armed forces carry out their duties conscientiously," he said. "Unfortunately, however, a minority of Greek officers seek and demand bribes for weapons programs to be implemented."

Greece was once a major arms purchaser amid decades of high tension with NATO ally Turkey that nearly caused three wars in as many decades, but new orders have dried up since the country suffered the crisis in late 2009.

The governing coalition is facing a crucial test of popularity in May with elections for local government and the European Parliament being held after years of drastic cuts that have plunged the economy into depression and left more than one in four workers unemployed.

The crisis, and its acute social backlash, heightened resentment of the country's political establishment, pushed a small left-wing anti-austerity party to the main contester for power and even propelled to center-stage a marginal Nazi-inspired nationalist group that is currently polling as Greece's third most popular political party.